The Economic and Monetary Affairs Committee of the European Parliament in an opinion vote on Monday recommended that Latvia should join the Eurozone on January 1, 2014.

The opinion praises Latvia's record and efforts to date, but also says it needs to strengthen its national economic governance structures and reduce its shadow economy. Latvia's heavy dependence on energy imports poses price stability risks, it added.

The opinion, authored by Burkhard Balz, was approved by 35 votes to one with two abstentions. It follows up on the European Commission's positive recommendation of June 5. The committee's opinion commends the "credible and sustainable efforts by the Latvian government and people," but also warns that reforms must not slow down.

The Latvian government needs to do more to remedy structural deficiencies in the labor market and to reduce poverty and growing income inequality, say MEPs. It should also do more to ensure that Latvian banks are sound, in particular by stepping up supervision of banks active in non-resident deposit business, they added.

The opinion notes that Latvia's price stability is "very dependent" on commodity prices, particularly of energy. The problem is compounded by the fact that Latvia imports much of its energy needs from a single source and an effort should be made to remedy this, the text adds.

The European Parliament is likely to endorse the committee's recommendation at next week's plenary session and EU Finance Ministers are expected to give their green signal on July 9.